Proxicom tests waters a day after severe Net-stock sell-off

CBS.MarketWatch.com

NEW YORK (CBS.MW) -- E-commerce consultant Proxicom bravely tested the market Tuesday, going public a day after the worst sell-off this year in high-tech stocks.

The company was rewarded for its courage with a 50-percent premium above the offering price. The stock
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hit the Street at 1 p.m. Eastern time at just under $19 a share. It closed the first day of trading at 19 1/2 after rising as high as 23 1/4.

Proxicom, which helps large corporations build e-commerce applications, priced its 4.5 million-share offering at $13 a share, at the low end of its revised pricing range of $13 to $14 a share. The range was raised on Monday from the original range of $10 to $12 a share. BT Alex. Brown was the lead underwriter.

David Menlow, president of Millburn, N.J.-based IPO Financial Network, correctly speculated that Proxicom would open for trading about 5 points higher than the offering price.

"There's a tremendous awareness that you just don't go on America Online, put up a home page, and that's how you build an Internet presence," said Menlow, whose firm predicts opening-trade premiums for new issues.

Competition is fierce, with just about every consulting and service company adding the ability to build Web sites to its product line. This includes large systems integrators like Andersen Consulting and Perot Systems
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new-wave information technology consultants like IPO hopefuls Viant and Scient, and even online marketing firms like Modem Media Poppe Tyson
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Yet Menlow said the market is large enough to support Proxicom's initial market cap of $310.7 million. The company would likely agree. "Proxicom believes the market will continue to offer significant opportunity for multiple players," the company wrote in its prospectus.

In 1998, the company generated a loss of more than $20.6 million on sales of $42.4 million. The historically profitable company's slide into the red last year was due mainly to more than $21 million in compensation and acquisition charges.

Many other companies likely watched the debut of Proxicom closely. According to CommScan's EquiDesk, 32 percent of the IPO backlog consists of Net-related companies, which are expected to raise $4.7 billion. In March alone, a record 36 new Webbies filed to go public.

As far as this week is concerned, Net Perceptions, Internet Financial Services, Log On America, Launch Media, Musicmaker.com and Marimba are still hoping to make their market debuts.

But the hottest deal of the week could end up being a 134-year-old auctioneer of fine arts and other collectibles, San Francisco-based Butterfield & Butterfield. Thanks to a recent pact with EBay
EBAY, -1.44%
the company has the necessary dot-com connections, plus profits to boot.

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